Comment on Option buying: The riskiest trade out there

Madhan commented on 05 Jul 2021, 01:23 AM

Just need an explanation of the exposure part, as stated above if I buy 1 lot nifty call at Rs.7500 roughly I am exposed to 12 lacs i.e. Risk of losing 12 lacs ?
But generally Option buyers risk is limited to premium right.
Correct me or please explain.
Reference: Showing exposure in terms of the contract value
Currently, all trading platforms typically show the margins available in the trading account and margins used, but not the overall exposure. For example, if you buy 1 lot of Nifty futures using Rs 1.5L, the exposure is Rs 12L while your margin is Rs 1.5L. Similarly, if you buy 1 lot of Nifty calls with Rs 7500 as premium, the exposure to Nifty is Rs 12L and not just Rs 7500.

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